DCIT, CENTRAL CIRCLE 30, NEW DELHI vs. PRAKASH INDUSTRIES LTD, HISSAR
Facts
The revenue appealed against the CIT(A) order which held that charging interest u/s 234B/234C by the AO through a rectification order u/s 154 was incorrect and barred by limitation. A search operation u/s 132 led to an assessment u/s 153A, which did not charge interest. Subsequently, an assessment u/s 147 was framed but later quashed by the CIT(A) for want of jurisdiction, after which the AO attempted to rectify it to charge interest.
Held
The Tribunal upheld the CIT(A)'s decision, ruling that the AO could not assume jurisdiction to rectify an order that was already held to be "nonest" (quashed for want of jurisdiction). It reinforced that once an assessment is abated due to a search operation and a new assessment u/s 153A is completed, the original proceedings lose their validity, making subsequent rectification attempts on quashed orders invalid.
Key Issues
1. Whether an assessment order quashed for want of jurisdiction can be subject to rectification to charge interest u/s 234B/234C. 2. The validity of an AO's rectification order concerning interest when the underlying assessment proceedings were abated and subsequently quashed.
Sections Cited
234B, 234C, 154, 143(2), 132, 153A, 148, 147, 250, 115JB, 4(1), 139(1), 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: SH. N. K. BILLAIYA & SH. C.N. PRASAD
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’, NEW DELHI
BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND SH. C.N. PRASAD, JUDICIAL MEMBER ITA No.1929/Del/2023 Assessment Year: 2011-12 DCIT Vs. Prakash Industries Ltd. Central Circle 30 15 KM Stone Delhi Road, New Delhi Hisar, Haryana – 125044 PAN No.AABCP6765H (APPELLANT) (RESPONDENT) Appellant by Sh. P N Barnwal, CIT DR Respondent by Sh. Ajay Wadhwa, Advocate Ms. Ayushi Gupta, Advocate Date of hearing: 29/02/2024 Date of Pronouncement: 05/03/2024 ORDER PER N. K. BILLAIYA, AM: This appeal by the revenue is preferred against the order of the CIT(A)-30, New Delhi dated 21.04.2023 pertaining to A.Y.2011-12.
The grievance of the revenue read as under :-
“Whether the CIT (A) was correct in holding that charging of interest was 2348/234C by AO is incorrect as order u/s 154 is barred by limitation when it is just a wrong computation of tax and
levy of interest u/s 2348/234C is automatic and is directly connected with the computation of tax.
Whether the CIT (A) was correct in ignoring the decision of Hon'ble Apex Court in the case of Rolta India Ltd. Wherein it was held that computation of interest u/s 234B/234C is mandatory and it has no bearing on the tax determining section whether it is calculated under normal provision or under 115JB (under MAT).
Whether on the facts and in the circumstances of the case and in the provisions of law the Ld. CIT (A) is justify in allowing the appeal of assessee/dismissing the appeal of the revenue ignoring the facts as held by Hon'ble Supreme Court of India in the case of Commissioner of Income Tax vs Shelly Products Writ Petition (Civil) 7501-7504 of 1997 May 8, 2003 that the liability to pay income-tax chargeable under section 4(1). thus, does not depend on the assessment being made. As soon as the Finance Act prescribed the rate or rates for any assessment year, the liability to pay the tax arises. The assessee is himself required to compute his total income and pay the income tax thereon which involves a process of self- assessment.
Whether the CIT (A) was correct in holding that the order passed by the AO u/s 154/250 was barred by limitation when it was rectified within 4 years and charging of interest u/s 2348/234C can be levied at any time as it is automatic and mandatory and is payable for default in payment of tax before the filing of return.
Whether the CIT (A) was correct in dismissing the appeal of the revenue when it will result in allowing the assessee legally for short payment of tax.
Whether the CIT (A) was correct in ignoring the decision of Hon'ble Apex Court in the 6. case of CIT vs M.H Anjuman Ghaswaka wherein principal was laid down by the court that levy of penalty u/s 234B/234C is automatic as it is embedded in Act and no one have power to change it.
That the grounds of appeal are without prejudice to each other.
That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either on or before the final hearing of the appeal.”
The representatives of both the sides were heard at length. Case records carefully perused and the relevant judicial decisions brought to our notice duly considered.
Facts emanating from the record show that the assessee filed its original return of income on 30.09.2011 declaring income of Rs.2736120458/-. The return was selected for scrutiny assessment and accordingly notice u/s. 143(2) of the Act was issued on 07.09.2012. A search operation was conducted on the premises of the assessee u/s. 132 of the Act on 30.10.2012. This means that as per provision of section 153 A of the Act the pending assessments get abated. Even then the assessee filed return of income on
30.03.2013 declaring total income of Rs.2736220458/- u/s. 115JB of the Act.
The assessee filed a return pursuant to notice u/s. 153A of the Act on 17.11.2014 and the income tax returned u/s.115JB of the Act was Rs.2736220458/-. The assessment u/s. 153A of the Act was completed vide order 29.03.2016 wherein the tax was computed on the income tax u/s. 115JB of the Act on Rs.2736220458/-. This order was challenged before the CIT(A) and the CIT(A) vide order dated 31.03.2017 deleted the additions made therein. Appeal effect was given on 06.07.2017 and no interest was charged u/s.234B and 234C of the Act.
The assessment was reopened by issue of notice u/s.148 of the Act. Pursuant to which the assessee filed its return of income on 11.04.2018 sharing income u/s. 115JB at Rs.2736120458/-.
Assessment order u/s.147 was framed on 31.12.2018 assessing income under normal provisions at Rs.554931240/-.
Assessment order framed u/s.147 of the Act on 31.12.2018 was challenged before the CIT(A) and the CIT(A) vide order dated 24.03.2021 quashed the said assessment order for want of jurisdiction.
The impugned order of rectification is for rectifying the mistake apparent from record which has been held to be nonest.
In our considered opinion the AO cannot assume jurisdiction to temper with the order which has been held to be nonest.
The following observations by the AO at para-10 of his order need special mention the same read as under :-
“10. In view of the above, following the provisions laid down by the Hon’ble Supreme Court of India, it can be inferred that interest u/. 234B and 234C of the IT Acct is applicable in the case of the assessee. Hence, the assessee company was liable to pay interest u/s. 234B and 234C at the time of filing of return of u/s. 139 (1) of the Income Tax Act or after the demand has been created as a result of processing of return u/s. 143 (1) of the I. T. Act.
Scrutiny of the records revealed that the interest u/s. 234B and 234C was not charged and the assessee company had not paid demand created u/s. 154 / 143 (1).
As the mistake is apparent from record, rectification order u/s. 154 / 147/ 153A of the Income Tax Act is hereby passed accordingly, making the correct calculation of tax and interest payable after giving credit of TDS and all taxes paid by the assessee.”
The above observations of the AO do not find any merit in the relevant provisions of the Act in as much as mentioned elsewhere
after the date of search i.e. 30.10.2012 the pending proceedings get abated and, therefore, the AO cannot assume jurisdiction to tinker with abated proceedings. The findings of the Hon’ble High Court of Delhi Neeraj Jindal 393 ITR 1 need a special mention here. The findings read as under :-
“21. Thus, it is clear that when the A.O. has accepted the revised return filed by the assessee under Section 153A, no occasion arises to refer to the previous return filed under Section 139 of the Act. For all purposes, including for the purpose of levying penalty under Section 271(1)(c) of the Act, the return that has to be looked at is the one filed under Section 153A. In fact, the second proviso to Section 153A(1) provides that "assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub- section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate." What is clear from this is that Section 153A is in the nature of a second chance given to the assessee, which incidentally gives him an opportunity to make good omission, if any, in the original return. Once the A.O. accepts the revised return filed under Section 153A, the original return under Section 139 abates and becomes non-est. Now, it is trite to say that the "concealment has to be seen with reference to the return that it is filed by the assessee. Thus, for the purpose of levying penalty under Section 271(1)(c), what has to be seen is whether there is any concealment in the return filed by the p assessee under Section 153A, and not vis-a vis the original return under Section 139.”
The DR had filed a written submission relying upon several judicial decisions which have been duly considered but found not to be applicable on the facts of the case discussed here in above. The facts of the case in hand are duly covered by the decision of the Hon’ble jurisdictional High Court mentioned here in above.
Considering the facts of the case from all possible angles we do not find any reason to interfere with the decisions of the CIT(A).
In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on 05.03.2024.
Sd/- Sd/- (C.N. PRASAD) (N.K. BILLAIYA) JUDICIAL MEMBRE ACCOUNTANT MEMBER *NEHA* Date:- .03.2024 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) ` 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI
